Crypto-Friendly Bank Silvergate Is Most Shorted Stock
Amid a regulatory crackdown on crypto, more traders are betting Silvergate’s stock will go down.
Crypto-friendly Silvergate Bank has clinched the title of most shorted stock on Wall Street—a strong indication that traders think the beleaguered bank’s stock price will continue to go down.
Of all the shares in Silvergate that are available for investors to buy and sell, 73.5% of them are being sold short, according to data from MarketWatch. The next most shorted stocks are Carvana (60.6%), followed by Applied UV (50.3) and Bed Bath & Beyond (48%).
When an investor sells a stock short, they borrow shares in a company and then immediately sell them, expecting to buy the stock for a cheaper price in the future and pocketing the difference.
Silvergate’s stock price was down around 11% Tuesday to $16.08, as of this writing. The figure represented a 92% decline from its all-time high of $222.13 in November 2021, when the digital assets industry was booming and the price of Bitcoin was around $63,000.
Billionaire investor George Soros is among those betting that Silvergate’s stock price will fall further, according to a recent filing with the Securities and Exchange Commission (SEC). The put options purchased by Soros’ hedge fund–which gives traders the right to buy shares at a lower price–were valued at $1.7 million.
Investors piling on bets against Silvergate comes amid a regulatory crackdown on crypto by both banking regulators and the SEC.
The Department of Justice (DOJ) revealed earlier this month that it was examining the bank’s relationship with cryptocurrency exchange FTX, which collapsed last November, leading founder Sam Bankman-Fried to be charged with a litany of financial crimes.
The DOJ is looking into how the La Jolla-based institution handled bank accounts held in connection with the exchange as well as those tied to Alameda Research,
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